Tips Collected Electronically: Withholding Requirements

Where tips are “paid” by an employer, they are pensionable and insurable. In such cases, the employer must also withhold income tax and report the amounts on the employee’s T4. CRA’s current administrative policy is that if the tip is controlled by the employer (controlled tips) and then transferred to the employee, it is considered to be paid by the employer. In contrast, direct tips are considered to have been paid directly by the customer…

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Required Travel: Between Home and Work

A June 21, 2022 Tax Court of Canada case considered whether motor vehicle costs of $1,642 associated with a construction foreman’s travel between home and various job sites were deductible against employment income. The taxpayer worked on many of his employer’s 50 projects, located at numerous construction sites. The taxpayer was responsible for ensuring that the workers were in place each morning and were ready to work with properly functioning tools, materials and equipment. This…

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Immediate Capital Asset Write-Off: Budget 2021

The 2021 Federal Budget proposed to allow immediate expensing of certain property acquired by a Canadian-controlled private corporation (CCPC) on or after April 19, 2021 (Budget Day) and before 2024. Up to $1.5 million per taxation year is available (shared among associated CCPCs, and prorated for short taxation years), with no carry-forward of excess capacity. Property eligible for this immediate write-off is quite broad. It includes all depreciable capital property, other than certain assets with…

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Contributions of Goods or Services to a Non-Profit Organization: Tax Implications

In a January 6, 2020 Technical Interpretation, CRA considered whether a deduction was available to suppliers who contributed in-kind goods or services to an NPO withthe expectation that they would benefit from word of mouth advertising and promotion. Where the supplier is providing goods or services to an NPO in exchange for advertising and/or promotional services, a barter transaction may have occurred. As such, the typical rules for barter transactions would apply. In arm's length…

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Reporting Tips for Service Workers
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Reporting Tips for Service Workers

Tips received by servers and other individuals in the service industry are taxable. However, since tips do not show up on T4 slips, some taxpayers are under the false understanding that they are either not taxable, or only partially taxable. In a February 3, 2020 Federal Court of Appeal case, the Court upheld the Tax Court decision that tips received by the taxpayer from his employment as a slot attendant at a casino were properly…

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